PA10-1 (Algo) Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle Rate on Each [LO 10-4, 10-5] Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,207,000 $ 1,808,000 Cost of goods sold and operating expenses 883,000 1,286,000 Net operating income $ 324,000 $ 522,000 Average invested assets $ 1,110,000 $ 1,410,000 The companys hurdle rate is 8.01 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for the division for each independent situation that follows: a. Operating income increases by 11 percent. b. Operating income decreases by 12 percent. c. The company invests $250,000 in each division, an amount that generates $115,000 additional income per division.

d. Coolbrook changes its hurdle rate to 6.01 percent.